Did You Owe Money or Get a Refund This Tax Season?
The tax deadline is behind us for 2025. How did it work out for you? Did you owe money, or did you get a refund? If you owed money to the government, it can be a real jolt to your savings. At GenWealth, we are not CPA’s and don’t offer tax advice, but we believe the best way to settle on tax day is to break even.
You don’t want to have to tap your emergency savings to pay your tax bill. And getting a large refund feels good, but you’ve been loaning it to the government all year. You could’ve done more for you and your finances if you kept it.
So, if you got a big refund this year, consider backing off of your paycheck withholdings. But if you owed money, there are some ways to plan ahead and not be scrambling to find money to pay your taxes next April.
How to Fix Your W-4 and Paycheck Withholdings
Check your W-4 form that you filled out for your employment. This set up your tax withholdings. Is your filing status correct? Are you claiming the right number of dependents? You can decrease this, and it will increase your withholdings. You may also be able to ask your employer to withhold a little extra from every paycheck.
Maximize Your 401(k) Contributions and Retirement Tax Savings
Are you maxing out your 401k? Often times, a worker stops at the match. In other words, if their company offers a 5% match, they contribute 5% of their salary. They may even think they are maxing out their contributions. Don’t think of your contributions as a percentage of your income. In 2026, you can contribute up to $24,500 of your income. And if you’re 50 or older, you can contribute an extra $7,500 on top of that. There is also a special catch-up if you are age 60-63 that totals $11,250. It is important to note, if you make over $150,000 a year, the catch-up contributions must be made in Roth dollars. But, there could be significant tax savings for a two income household if the spouses are not currently maxing out their retirement plans.
HSA and FSA Accounts: The Tax-Advantaged Health Care Strategy You’re Missing
Another place to save taxes is through HSA and FSA accounts. A Health Savings Account is triple tax-advantaged. Your contributions are tax deductible in 2026. They grow tax-deferred, and withdrawals are tax-free, as long as you use them for qualified medical expenses.
A Flexible Spending Account is great if you know you will have on-going medical bills or drug costs. It allows you to make pre-tax contributions during the year to an account you can use for health care costs. These accounts may be offered through your employer. It’s worth checking out.
Track Your Expenses to Maximize Deductions and Lower Your Tax Bill
And finally, get serious about tracking your expenses. Things like mortgage interest, property taxes, business mileage, and charitable contributions. About 90% of tax filers take the standard deduction. Most don’t have enough qualified expenses to itemize. But, if you’re filing on your own, you may not know if you can. Tracking your expenses can let you know at year’s end if there’s an opportunity to increase your deductions and it could lower your tax bill.
Work With a Financial Team to Minimize Taxes and Prepare for Retirement
Bottom line – find a financial team, including a financial advisor and a CPA who can work together to minimize your tax bill and better prepare you for retirement.
Securities are offered through LPL Financial, Member FINRA/SIPC. GenWealth Financial Advisors is an other business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance, LLC, a registered investment adviser. Independent Advisor Alliance, LLC is a separate entity from LPL Financial.
